Economic ideas you should forget

It is high time to forget some economic ideas that hinder progress in the field. Some examples include the assumption that GDP is the best way to measure economic progress, or the belief that economic growth will eventually improve the welfare of the population as a whole. This column discusses some of these ideas and argues that economics is a progressive science that is enriched by the ‘creative destruction’ of ideas.

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In a recently published book (Frey and Iselin 2017), we make an effort to provide such information. We collect no fewer than 71 contributions from academic scholars all over the world. Some are prominent economists – such as Daron Acemoglu, Alan S. Blinder, Richard Easterlin, David Hendry, John Kay, Margaret Levi, Andrew J. Oswald, Eric Posner, Jeffrey Sachs and Hans-Werner Sinn – and others are lesser known young scholars. The collection also includes contributions from academics outside economics, including from sociologists, psychologists and ethnologists. Younger scholars and ‘outsiders’ may be particularly well-endowed to see ‘dead wood’ in economics which is no longer useful for today’s world. We aim to reveal the diversity of opinions and evaluations, to stimulate the discussion and to push forward knowledge. We see economics as a progressive science that does not lose its force when parts of its theory are empirically rejected. On the contrary, to discard unhelpful and misleading ideas shows that a discipline is vigorous as suggested by Joseph Schumpeter’s idea of ‘creative destruction’.

Hmm.

The book webpage says even doing away with Says law, Coase theorem and so on:

By discussing problematic theoretical assumptions and drawing on the latest empirical research, the authors question specific hypotheses and reject major economic ideas from the “Coase Theorem” to “Say’s Law” and “Bayesianism.” Many of these ideas remain prominent among politicians, economists and the general public. Yet, in the light of the financial crisis, they have lost both their relevance and supporting empirical evidence.